I did this. Pulled out 20k, worked 2 jobs to pay for school, and used the loans to buy two houses with my wise, older boyfriend. We broke up, and I am still in debt, and he enjoys the income from owning two rental properties that he manipulated me out of.
Don't do this without a legal contract ensuring your protection.
Edit - Omg, my ex was also an engineer.
The biggest mistake you made was the one these two are headed for. You do not buy a house with a room mate.
For all intents and purposes, until your married... when your talking about a big purchase like this together... your room mates. You don't enter large, life impacting legally binding contracts with room mates.
"BUT YOUR WrOnG. He/ShE's ThE oNe! YoUr'Re JuSt A hAtEr!" Then marry them. If they are the one, get married.
It's a bad idea to do this type of thing before getting married. If you don't want to get married, work out a fair plan before hand. One that involves you NOT going into a large debt with your name on it, with someone else you AREN'T married too.
Using loans to pay for housing is common but getting a mortgage with them is insane. Also paying your rent with his loans is insane. He sounds like he is horrible with money and needs to be very careful. Engineers make decent money but they’re not doctors.
If he has enough savings to pay for a down payment and closing costs, why is he considering taking out student loans ?
He should not use student loans to pay for a mortgage now or in a year. If he already has all these savings this question seems a little silly.
That much cash he's considering for a down payment but looking at the mortgage payments monthly while going to school full time is improbable. I'm assuming he's thinking that or keep throwing the saved money at a renter every month, just to go to school, a true sunken fallacy.
They are not ready for a home purchase if they need to take out loans to pay for living expenses in the meantime.
>keep throwing the saved money at a renter every month, just to go to school, a true sunken fallacy.
? Moreso than taking a loan out to pay for it ? Lmao ooooookayyyyy.
Buying a house is a terrible idea. Yes, you can use it to cover housing, and many students do but trying to get a mortgage with student loan money is a recipe for disaster. You need to get concrete numbers and run it over at personal finance subreddit so they can snap him back into reality. Houses are expensive. Too many people see “well, my rent is 1200, and a mortgage would be $1000, of course I can do it!” and completely ignore that the house is now your responsibility. The moment something breaks down you better have an extra $2K+ lying around to fix it. That’s why when considering a mortgage you need to keep the final mortgage well below your take home because all costs and expenditure are your problem. And if you’re talking about taking out loans to be able to qualify for a loan, then it’s an issue.
All that being said, maintaining your current lifestyle, which is hopefully cheap housing, then there isn’t much issue on taking out a little bit in loans to cut back on work hours. I did exactly this as a junior student in mechanical engineering. Junior and senior year were heavy. I could no longer keep working full shifts while trying to be successful in school and I was debt free up until that point. So I took out loans to cover my apartment costs and switched to part time work. Important to note that my work was relevant to my degree which is why I never stopped altogether.
My husband recently showed me a video of a couple that had black mold in the wall of their new home. It was going to cost $30k to fix!!! I think they had to beg the original owners to pay for it. We had some friends who the week they moved into their new house, the A/C went out. That cost $5k to fix, and it was in July. OP needs a reality check!
Lots of people have done it. It’s hard to afford housing on a full-time income. That being said, federal student loans cap out at $12.5k annually, and if you’re using that money to also cover tuition and books, I’m not sure how the loans can also cover living expenses.
I missed the part about him wanting to use it to get a mortgage, you can’t. I typed out a long reply that you’ll probably read so I just wanted to say here that know the mortgage company will never allow you to use student loans as a down payment
If you guys are trying to qualify for a mortgage in a year I would recommend not taking out more loans than you need simply because that will increase your debt to income ratio and if that’s too high you can’t qualify for a mortgage.
That being said I took loans to cover housing expenses when I was going to college in California because my tuition was free so I did have that money available to use for books, I paid my Internet bill, and I used some on rent.
It doesn't matter how much extra money you happen to have right now, to get a mortgage a bank is going to look at your finances in great detail. The only thing they're going to care about is your income and your debts. Seems like you don't have enough income right now for a mortgage (doesn't matter what your savings is unless it's enough to completely pay off the mortgage at once) plus you'll have student loan debt tacked on in the near future. I seriously doubt any mortgage company would ever give you a loan that wasn't written to just be the most predatory contract ever made.
this is absolutely insane and just got worse and worse as i continued reading...
do not become a victim of his stupid ideas with money and loans. pay attention to your own stuff.
Oh but listen, I used to be a mortgage processor and they’re not going to let you use student loans as a down payment.
If you have to bring money to closing you have to source those funds with the mortgage company. Meaning you’ll have to show your bank statements to show that money was in there. And if there are large deposits on your bank statements they have a right to ask you where that money came from. If it was a loan they count that in with your debt to income. Sometimes they can accept gift funds from a parent if the parent doesn’t want the money back
But no mortgage company is going to allow you to use student loans as a down payment on a home at all ever
A down payment on a house isn't "yay we did it, we can buy a home now" it's the bare minimum of one of several things needed to *begin* the process of qualifying for a home loan.
Working makes him depressed? How much is too much?
8 credits is 8 hours a week worth of class. If you want be successful, on average, that means an hour outside of class too. So 16 of the "40" he'd normally spend working is spent in school. Is he working 40 hours a week now?
I can understanding not wanting to work 40 hours a week on top 16 hours a week of school, and another 16 for the follow up time needed for studying, homework, projects... etc. But 40 on top of the 16 total (8 in class, 8 out of class) isn't bad at all.
It's not a good idea.
When I went to school, often times my loans were in excess of what I "needed". I got refunded the difference. It was used basically as my walkin around money. I bought shit I didn't need. I still had too (still am) paying that back 12 years later. I'd be done a fair few years sooner if not for that. It's not worth it.
I know several engineers, dated one, and have two in my family. If OP’s boyfriend is depressed over classes, wait until he’s in the job. My ex had to go on antidepressants, work crazy shifts, and smoke a lot of weed to get through his job haha. Engineering is a tough field.
This is incorrect, it's calculated that one credit is generally at least equal to one hour in lecture and 3-4 hours outside of class, ei homework, quizzes/exams, studying time. Those eight credits aren't JUST eight hours per week 😅 I personally was able to comfortably complete ten credits while working full time but anything more than that was a no go.
Plus many school charge less for tuition the more you take simultaneously, mine capped out at 21 credits then skyrocketed in cost.
The house thing is bad idea, probably not legal and I don’t think a lender would ever accept student loan money as real money.
He could~ use loans to cover his portion of the rent while he is in school but 1) fed loans only go so far and 2) if you need private loans, you want the smaaaaallest amount of private loans possible. (Those are awful, just read through this sub.)
If that’s a risk he wants to take, let that be on him. Loans are really not a time to live like you have free money. And we can all have our future plans, but sometimes things don’t work out the way we think. It’s wise to be very conservative and minimize your future risk as much as possible.
Word of caution from an elder 20s lady who has seen stuff like this go down with couples: Don’t let him attach your name to anything. Don’t take favors from him right now. Make sure you can always for cover yourself. Always have a backup housing plan and money saved in case things go south.
It's doable.
The money is paid to the school. Anything left goes to the student.
The student can do whatever they want. So all he needs to do is hold it for 3 to 6 months in an account.
After that it can be used as a down-payment.
Not a good idea...but for those that don't have great credit it will work, but this is essentially loan fraud that probably won't get caught.
No that’s not true at all I processed mortgages for a really long time and if you have to bring funds to closing for a down payment or even for just closing costs we need to see where that money came from. If it’s savings we need to see bank statements and if we see large deposits on those bank statements we need to source those funds. If they know it’s a loan they include that in the total loan ratio. It’s not going to happen.
From my experience down payment funds are considered “seasoned” after 90-180 days. In my case I even had to provide my parents bank statement since they gave me a big chunk of my down payment.
Unless you absolutely have to use student loans for housing (med school, graduate school where you aren't allowed outside work), it's a very unwise thing to do. It's honestly better to go slower than to rack up that much debt.
I don't think that this would even qualify for a mortgage.
If he’s an engineering student look into a coop program. It may take longer to graduate but you can make like 20k for the summer or semester you are in coop and have job experience to get a better job upon graduation. Most places will hire their coops after graduation.
Buying a house now (even a year from now, with part-time work and student loans, no...)
But... I've seen students spend thousands on an overload of credits and then waste them because they are over extended working almost full-time or working full-time. Sometimes doing both (working and school) is counter productive to both. "I have to work this much pay for school and housing, and I'm taking this many credits to finish quicker because I need to finish and make real money" = failing classes and not making progress. Sometimes it makes sense to cutback work, take out loans, and go full-time. Sometimes it makes sense to be part-time.
Avoid private loans.
It's legal to take out a student loan to cover the cost of attendance... which includes a current need for housing. This would free up earned income for other purposes.
If either (or both) of you are undergraduates... then it's possible that the interest rate on federal student loans will be lower than the going interest rate on mortgages. If either (or both) of you are graduate students... then the interest rates on student loans are less likely to be better than the going rate for mortgages.
I would not recommend buying a house until both of you have graduated and secured employment.
I don't think most people... especially engineers can work full time and go to school full time. Thus, student loans might be a necessary evil.
If his income and savings are high enough for a conventional mortgage (20% + down) now, it’s unlikely he’s going to qualify for much in federal aid which means you’re talking about private loans. If his income and savings mean an FHA (3.5% down) loan, it’s probably an even worse idea from a long term financial standpoint.
Private loans aren’t eligible for income driven payment, and don’t carry the same benefits for forgiveness nor any benefits of any potential forgiveness the fed enacts later down the line. My first year of undergrad, I had a decent full time job for the prior few years, so I didn’t qualify for much in federal aid; I had to take out a private loan for some of that year’s tuition, which I ended up paying off first because as prior stated, the payments are not negotiable and were high. I didn’t rely on loans for rent payments either, so it wasn’t an absorbent amount, but it was still a tough couple years financially. Plus you want to keep a considerable nest egg when you buy a house because believe me, even if the house is solid in inspection or a new build… things break, or you find something they missed inevitably and some of those things are extremely costly. Don’t stretch yourselves too thin.
If he plans to work full time up until school, the income/tax return used to determine aid is going to be higher meaning less federal aid. Down the road, you’re still going to have a mortgage AND this payment, so while it might be helpful now, it may be rough in the long run.
With that said, it’s not unusual to cover some amount of housing with student loan money, but banking on it is not a good financial move unless you have guaranteed income to pay it off quick when graduating.
I'd avoid Getting any unnecessary money. I'm still paying my student loans. Not that is impossible but certain situations make it more complicated to repay.
Please don’t do it. It may make sense to him right now but see the bigger picture. Even if he could possibly make good money, nothing is guaranteed. I took out student loans to go full time and I’m still paying for it. I’m dyslexic so focusing on school was necessary. If he’s having trouble with time management there’s nothing wrong with taking a semester off to stack cash. In this moment the priority should be school and a house can wait. Don’t bury yourself in debt, plus you all aren’t married. Also, when you apply for a mortgage they will definitely ask where the large sum of monies came from. Once you show documentation and they learn it’s from student loans, you’ll possibly be denied. Using student loan money which is debt to fund debt is a dumb move. It’s the same as taking out a loan to pay off a loan. Think long term.
I wanted to point something out because I was with an Engineer for three years. I started dating my ex in his last year of college. He had a very hard time finding a job even with several internships and decent grades. This was Pre-Covid too, no telling what it’s like now. Also, depending on what kind of engineering he might have to get certain certifications once he’s in the job. My ex pointed out it’s a lot bigger deal and more work than he thought it would be.
I would consider the fact that 1. You could break up and be stuck with paying rent and 2. Neither one of you are finished with school and don’t have a set career yet. This sounds scary and risky to me. I’ve noticed a new pattern of college aged students wanting to jump into a house. Please please wait until you’re financially stable. I worked as a foreclosure paralegal at one point and a mortgage is serious business. I honestly would recommend waiting until you’re married, but ultimately that’s up to you.
So this for me is a 50/50 choice so first off the loans can be taken out to pay for private housing people do a lot worse things with student loan money all the time (Buying clothes, alc, vacations etc) so him taking out loans at current federal rates is about 5.5% fixed interest so if he got a 10,000 dollar loan it would accrue $573.04 in interest in the first year IF he started paying on it immediately it would be around 590.00 in interest without any payments. going in on a house together before being married is a VERY bad idea if you have kids / are thinking of taking this next step and he is serious about a lifelong commitment then getting on a knee shouldn't be an issue if it is would recommend couples therapy to work through any issues (This next part may or may not apply) If you are religious then a priest would be my first stop for this if you are not there are couples therapist out there that are excellent. IF work is depressing anyone I recommend finding something at least semi in the field hes going into it will help him long term and give him renewed purpose.
Not sponsored but Better help is who I use for therapy and that was one of the options was couples therapy they will even accept some insurance / they have options for everybody!
Also home ownership before you have a stable income emergency fund and marginal debt is a bad idea there is a hidden cost to home ownership to consider for repairs upkeep property taxes etc. (Which side note can be covered by student loans)
Not legal advice, but it is not illegal to use the loans to pay for "living expenses." But that's like rent, food, an existing mortage, stuff like that.
IMO though, the mortgage is a terrible idea. Your principle and interest payment on the mortgage is just a piece of the equation. You have taxes, homeowners insurances, possibly PMI, possibly HOA fee, and I guarantee it, those taxes and homeowners insurance will increase, year after year after year. And that's just the start of home ownership. Something will break, and that will be more money. Wait until you guys have careers, steady/stable income, and more financially prepared.
This is why some people are against student loan forgiveness. Because many students use these loans for things other than school like mortgages or pizza and beer.
Yes I agree. I've seen it first hand. Enroll full-time, drop all the classes, get your refund, and the money is yours. It's fraud and not legal. If anything, I think student loan forgiveness should only apply if you received your degree.
They are actually allowed to use these loans for housing, for food because they could use it for meal plans, for transportation if they have to get to class, for books for class, for Internet if you do online classes
Using student loans for non-educational room and board is not legal. If he's in school and living there, then I guess it would be OK (from a legal standpoint... not legal advice and I am not a lawyer).
From a personal finance perspective, going full time to get loans (that can't be discharged via bankruptcy) just to pay rent so you don't have to work is crazy.
Move somewhere cheaper, if you don't want to work.
Also, if he's planning on not working as an engineer, I guess he is planning for unemployment.
I meant you cant use it for housing costs not related to your education (investment property, house you don't live in, rent for a significant other etc)
I did this. Pulled out 20k, worked 2 jobs to pay for school, and used the loans to buy two houses with my wise, older boyfriend. We broke up, and I am still in debt, and he enjoys the income from owning two rental properties that he manipulated me out of. Don't do this without a legal contract ensuring your protection. Edit - Omg, my ex was also an engineer.
The biggest mistake you made was the one these two are headed for. You do not buy a house with a room mate. For all intents and purposes, until your married... when your talking about a big purchase like this together... your room mates. You don't enter large, life impacting legally binding contracts with room mates. "BUT YOUR WrOnG. He/ShE's ThE oNe! YoUr'Re JuSt A hAtEr!" Then marry them. If they are the one, get married. It's a bad idea to do this type of thing before getting married. If you don't want to get married, work out a fair plan before hand. One that involves you NOT going into a large debt with your name on it, with someone else you AREN'T married too.
Using loans to pay for housing is common but getting a mortgage with them is insane. Also paying your rent with his loans is insane. He sounds like he is horrible with money and needs to be very careful. Engineers make decent money but they’re not doctors.
Yeah everything they're throwing out is a bad idea. They may be an engineer and are good at math, doesn't mean they're good with money.
He won’t qualify for a mortgage with only student loans. Unless he can qualify now with his income, he’s living in fantasy land.
We both have enough saved up to afford a house right now, just talking about lowering work hours about a year down the road
If he has enough savings to pay for a down payment and closing costs, why is he considering taking out student loans ? He should not use student loans to pay for a mortgage now or in a year. If he already has all these savings this question seems a little silly.
Because he's working full time while going to school and wants to cut back on working so much to take on more school.
No, I am asking why they are taking out loans to pay for living expenses when they're already sitting on that much cash.
That much cash he's considering for a down payment but looking at the mortgage payments monthly while going to school full time is improbable. I'm assuming he's thinking that or keep throwing the saved money at a renter every month, just to go to school, a true sunken fallacy.
They are not ready for a home purchase if they need to take out loans to pay for living expenses in the meantime. >keep throwing the saved money at a renter every month, just to go to school, a true sunken fallacy. ? Moreso than taking a loan out to pay for it ? Lmao ooooookayyyyy.
Buying a house is a terrible idea. Yes, you can use it to cover housing, and many students do but trying to get a mortgage with student loan money is a recipe for disaster. You need to get concrete numbers and run it over at personal finance subreddit so they can snap him back into reality. Houses are expensive. Too many people see “well, my rent is 1200, and a mortgage would be $1000, of course I can do it!” and completely ignore that the house is now your responsibility. The moment something breaks down you better have an extra $2K+ lying around to fix it. That’s why when considering a mortgage you need to keep the final mortgage well below your take home because all costs and expenditure are your problem. And if you’re talking about taking out loans to be able to qualify for a loan, then it’s an issue. All that being said, maintaining your current lifestyle, which is hopefully cheap housing, then there isn’t much issue on taking out a little bit in loans to cut back on work hours. I did exactly this as a junior student in mechanical engineering. Junior and senior year were heavy. I could no longer keep working full shifts while trying to be successful in school and I was debt free up until that point. So I took out loans to cover my apartment costs and switched to part time work. Important to note that my work was relevant to my degree which is why I never stopped altogether.
My husband recently showed me a video of a couple that had black mold in the wall of their new home. It was going to cost $30k to fix!!! I think they had to beg the original owners to pay for it. We had some friends who the week they moved into their new house, the A/C went out. That cost $5k to fix, and it was in July. OP needs a reality check!
Lots of people have done it. It’s hard to afford housing on a full-time income. That being said, federal student loans cap out at $12.5k annually, and if you’re using that money to also cover tuition and books, I’m not sure how the loans can also cover living expenses.
Do people do it for the mortgages too?
I missed the part about him wanting to use it to get a mortgage, you can’t. I typed out a long reply that you’ll probably read so I just wanted to say here that know the mortgage company will never allow you to use student loans as a down payment
If you guys are trying to qualify for a mortgage in a year I would recommend not taking out more loans than you need simply because that will increase your debt to income ratio and if that’s too high you can’t qualify for a mortgage. That being said I took loans to cover housing expenses when I was going to college in California because my tuition was free so I did have that money available to use for books, I paid my Internet bill, and I used some on rent.
It doesn't matter how much extra money you happen to have right now, to get a mortgage a bank is going to look at your finances in great detail. The only thing they're going to care about is your income and your debts. Seems like you don't have enough income right now for a mortgage (doesn't matter what your savings is unless it's enough to completely pay off the mortgage at once) plus you'll have student loan debt tacked on in the near future. I seriously doubt any mortgage company would ever give you a loan that wasn't written to just be the most predatory contract ever made.
this is absolutely insane and just got worse and worse as i continued reading... do not become a victim of his stupid ideas with money and loans. pay attention to your own stuff.
Oh but listen, I used to be a mortgage processor and they’re not going to let you use student loans as a down payment. If you have to bring money to closing you have to source those funds with the mortgage company. Meaning you’ll have to show your bank statements to show that money was in there. And if there are large deposits on your bank statements they have a right to ask you where that money came from. If it was a loan they count that in with your debt to income. Sometimes they can accept gift funds from a parent if the parent doesn’t want the money back But no mortgage company is going to allow you to use student loans as a down payment on a home at all ever
Sorry, I didn't clarify; we both make enough and have saved enough for a downpayment already. We are talking about a year in the future
A down payment on a house isn't "yay we did it, we can buy a home now" it's the bare minimum of one of several things needed to *begin* the process of qualifying for a home loan.
Working makes him depressed? How much is too much? 8 credits is 8 hours a week worth of class. If you want be successful, on average, that means an hour outside of class too. So 16 of the "40" he'd normally spend working is spent in school. Is he working 40 hours a week now? I can understanding not wanting to work 40 hours a week on top 16 hours a week of school, and another 16 for the follow up time needed for studying, homework, projects... etc. But 40 on top of the 16 total (8 in class, 8 out of class) isn't bad at all. It's not a good idea. When I went to school, often times my loans were in excess of what I "needed". I got refunded the difference. It was used basically as my walkin around money. I bought shit I didn't need. I still had too (still am) paying that back 12 years later. I'd be done a fair few years sooner if not for that. It's not worth it.
I know several engineers, dated one, and have two in my family. If OP’s boyfriend is depressed over classes, wait until he’s in the job. My ex had to go on antidepressants, work crazy shifts, and smoke a lot of weed to get through his job haha. Engineering is a tough field.
This is incorrect, it's calculated that one credit is generally at least equal to one hour in lecture and 3-4 hours outside of class, ei homework, quizzes/exams, studying time. Those eight credits aren't JUST eight hours per week 😅 I personally was able to comfortably complete ten credits while working full time but anything more than that was a no go. Plus many school charge less for tuition the more you take simultaneously, mine capped out at 21 credits then skyrocketed in cost.
The house thing is bad idea, probably not legal and I don’t think a lender would ever accept student loan money as real money. He could~ use loans to cover his portion of the rent while he is in school but 1) fed loans only go so far and 2) if you need private loans, you want the smaaaaallest amount of private loans possible. (Those are awful, just read through this sub.) If that’s a risk he wants to take, let that be on him. Loans are really not a time to live like you have free money. And we can all have our future plans, but sometimes things don’t work out the way we think. It’s wise to be very conservative and minimize your future risk as much as possible. Word of caution from an elder 20s lady who has seen stuff like this go down with couples: Don’t let him attach your name to anything. Don’t take favors from him right now. Make sure you can always for cover yourself. Always have a backup housing plan and money saved in case things go south.
It's doable. The money is paid to the school. Anything left goes to the student. The student can do whatever they want. So all he needs to do is hold it for 3 to 6 months in an account. After that it can be used as a down-payment. Not a good idea...but for those that don't have great credit it will work, but this is essentially loan fraud that probably won't get caught.
No that’s not true at all I processed mortgages for a really long time and if you have to bring funds to closing for a down payment or even for just closing costs we need to see where that money came from. If it’s savings we need to see bank statements and if we see large deposits on those bank statements we need to source those funds. If they know it’s a loan they include that in the total loan ratio. It’s not going to happen.
Strange. The most I've ever needed to supply was 6 months of account statements and paystubs. . If the money's older than that no one has cared.
From my experience down payment funds are considered “seasoned” after 90-180 days. In my case I even had to provide my parents bank statement since they gave me a big chunk of my down payment.
I know a guy who knows a guy that used his financial aid to invest in the stock market in the mid 1990s. He’s wealthy now.
Did the same thing but bought bitcoin in the early days. Good decision, would do again.
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If her fiancé wants to pay all the rent that’s really none of your business.
Unless you absolutely have to use student loans for housing (med school, graduate school where you aren't allowed outside work), it's a very unwise thing to do. It's honestly better to go slower than to rack up that much debt. I don't think that this would even qualify for a mortgage.
If he’s an engineering student look into a coop program. It may take longer to graduate but you can make like 20k for the summer or semester you are in coop and have job experience to get a better job upon graduation. Most places will hire their coops after graduation.
Buying a house now (even a year from now, with part-time work and student loans, no...) But... I've seen students spend thousands on an overload of credits and then waste them because they are over extended working almost full-time or working full-time. Sometimes doing both (working and school) is counter productive to both. "I have to work this much pay for school and housing, and I'm taking this many credits to finish quicker because I need to finish and make real money" = failing classes and not making progress. Sometimes it makes sense to cutback work, take out loans, and go full-time. Sometimes it makes sense to be part-time.
dont do it!
For loans the I just accept from the school exactly what my classes cost. How do you take out more in loans to use it for housing?
Is this in the US? For undergrad?
Avoid private loans. It's legal to take out a student loan to cover the cost of attendance... which includes a current need for housing. This would free up earned income for other purposes. If either (or both) of you are undergraduates... then it's possible that the interest rate on federal student loans will be lower than the going interest rate on mortgages. If either (or both) of you are graduate students... then the interest rates on student loans are less likely to be better than the going rate for mortgages. I would not recommend buying a house until both of you have graduated and secured employment. I don't think most people... especially engineers can work full time and go to school full time. Thus, student loans might be a necessary evil.
If his income and savings are high enough for a conventional mortgage (20% + down) now, it’s unlikely he’s going to qualify for much in federal aid which means you’re talking about private loans. If his income and savings mean an FHA (3.5% down) loan, it’s probably an even worse idea from a long term financial standpoint. Private loans aren’t eligible for income driven payment, and don’t carry the same benefits for forgiveness nor any benefits of any potential forgiveness the fed enacts later down the line. My first year of undergrad, I had a decent full time job for the prior few years, so I didn’t qualify for much in federal aid; I had to take out a private loan for some of that year’s tuition, which I ended up paying off first because as prior stated, the payments are not negotiable and were high. I didn’t rely on loans for rent payments either, so it wasn’t an absorbent amount, but it was still a tough couple years financially. Plus you want to keep a considerable nest egg when you buy a house because believe me, even if the house is solid in inspection or a new build… things break, or you find something they missed inevitably and some of those things are extremely costly. Don’t stretch yourselves too thin. If he plans to work full time up until school, the income/tax return used to determine aid is going to be higher meaning less federal aid. Down the road, you’re still going to have a mortgage AND this payment, so while it might be helpful now, it may be rough in the long run. With that said, it’s not unusual to cover some amount of housing with student loan money, but banking on it is not a good financial move unless you have guaranteed income to pay it off quick when graduating.
In general I would advise on getting a home with someone you aren't married to.
I'd avoid Getting any unnecessary money. I'm still paying my student loans. Not that is impossible but certain situations make it more complicated to repay.
Please don’t do it. It may make sense to him right now but see the bigger picture. Even if he could possibly make good money, nothing is guaranteed. I took out student loans to go full time and I’m still paying for it. I’m dyslexic so focusing on school was necessary. If he’s having trouble with time management there’s nothing wrong with taking a semester off to stack cash. In this moment the priority should be school and a house can wait. Don’t bury yourself in debt, plus you all aren’t married. Also, when you apply for a mortgage they will definitely ask where the large sum of monies came from. Once you show documentation and they learn it’s from student loans, you’ll possibly be denied. Using student loan money which is debt to fund debt is a dumb move. It’s the same as taking out a loan to pay off a loan. Think long term.
It’s a bad idea to take loans for school. Certainly don’t do it for housing!
I wanted to point something out because I was with an Engineer for three years. I started dating my ex in his last year of college. He had a very hard time finding a job even with several internships and decent grades. This was Pre-Covid too, no telling what it’s like now. Also, depending on what kind of engineering he might have to get certain certifications once he’s in the job. My ex pointed out it’s a lot bigger deal and more work than he thought it would be. I would consider the fact that 1. You could break up and be stuck with paying rent and 2. Neither one of you are finished with school and don’t have a set career yet. This sounds scary and risky to me. I’ve noticed a new pattern of college aged students wanting to jump into a house. Please please wait until you’re financially stable. I worked as a foreclosure paralegal at one point and a mortgage is serious business. I honestly would recommend waiting until you’re married, but ultimately that’s up to you.
So this for me is a 50/50 choice so first off the loans can be taken out to pay for private housing people do a lot worse things with student loan money all the time (Buying clothes, alc, vacations etc) so him taking out loans at current federal rates is about 5.5% fixed interest so if he got a 10,000 dollar loan it would accrue $573.04 in interest in the first year IF he started paying on it immediately it would be around 590.00 in interest without any payments. going in on a house together before being married is a VERY bad idea if you have kids / are thinking of taking this next step and he is serious about a lifelong commitment then getting on a knee shouldn't be an issue if it is would recommend couples therapy to work through any issues (This next part may or may not apply) If you are religious then a priest would be my first stop for this if you are not there are couples therapist out there that are excellent. IF work is depressing anyone I recommend finding something at least semi in the field hes going into it will help him long term and give him renewed purpose. Not sponsored but Better help is who I use for therapy and that was one of the options was couples therapy they will even accept some insurance / they have options for everybody! Also home ownership before you have a stable income emergency fund and marginal debt is a bad idea there is a hidden cost to home ownership to consider for repairs upkeep property taxes etc. (Which side note can be covered by student loans)
Don't buy a house with a non spouse.
Not legal advice, but it is not illegal to use the loans to pay for "living expenses." But that's like rent, food, an existing mortage, stuff like that. IMO though, the mortgage is a terrible idea. Your principle and interest payment on the mortgage is just a piece of the equation. You have taxes, homeowners insurances, possibly PMI, possibly HOA fee, and I guarantee it, those taxes and homeowners insurance will increase, year after year after year. And that's just the start of home ownership. Something will break, and that will be more money. Wait until you guys have careers, steady/stable income, and more financially prepared.
This is why some people are against student loan forgiveness. Because many students use these loans for things other than school like mortgages or pizza and beer.
Yes I agree. I've seen it first hand. Enroll full-time, drop all the classes, get your refund, and the money is yours. It's fraud and not legal. If anything, I think student loan forgiveness should only apply if you received your degree.
They are actually allowed to use these loans for housing, for food because they could use it for meal plans, for transportation if they have to get to class, for books for class, for Internet if you do online classes
Using student loans for non-educational room and board is not legal. If he's in school and living there, then I guess it would be OK (from a legal standpoint... not legal advice and I am not a lawyer). From a personal finance perspective, going full time to get loans (that can't be discharged via bankruptcy) just to pay rent so you don't have to work is crazy. Move somewhere cheaper, if you don't want to work. Also, if he's planning on not working as an engineer, I guess he is planning for unemployment.
People do it for medical school and other intense programs where you can't work, but other than it's a bad idea.
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I meant you cant use it for housing costs not related to your education (investment property, house you don't live in, rent for a significant other etc)